UK: Is Medical Innovation Ready For The Evolution Of Value-Based Care?

The UK, like most other European governments, are facing
increasing pressure on their health budgets. One of the reasons for
this is the acceleration of medical innovations which are
increasing the demand for state-of-the-art treatment. As a result,
governments need to get more value for their spending and are
considering how best to incentivise "value-based
healthcare" (outcomes of health treatment relative to
cost).

Few would deny that the health care system is evolving. And, in
the case of health care, evolution is a good thing. It has brought
us new care delivery approaches, new treatments, and new
technological advancements that have created tremendous value to
patients. Now, the focus is shifting toward ways to curb rising
health care costs while maintaining and even improving the quality
of care patients receive today.

Payers – health plans, employers, and government entities
– are working with providers to test new value-based care
(VBC) payment models that shift the focus away from the number of
services to the value of those services. But defining value is not
easy, and the question remains, what does this mean for medical
innovation and the life sciences industry?

Last fall, the Deloitte Center for Health Solutions and the
Network for Excellence in Health Innovation (NEHI) convened 21
leaders across the health care system, including biopharma,
medtech, health plans, providers, academics, non-profits, and
patient groups to discuss this very question. Many important topics
were discussed throughout the day, but the participants really
sought to answer how medical innovation will be evaluated under VBC
and how VBC models can evolve to encourage medical innovation.

The results, which were published in "
Delivering medical innovation in a value-based world," are
telling. Today, there is much uncertainty around how VBC and
supporting policies might evolve. Even more uncertain is how
medical innovation will be evaluated, much less rewarded, under
these new models.

What is the impact if VBC models and policies do not consider
how to support patient access to medical innovation? For one,
today, many VBC models focus on process measures and short-term
clinical measures, leaving out long-term clinical or quality of
life improvements that medical innovation can bring. Some also have
relatively few quality measures and instead emphasize improvement
against financial goals. For example, the new mandatory
Comprehensive Care for Joint Replacement bundled payment model only
includes two quality measures. For providers working under these
models, there is a risk that they will consider short-term cost
over quality improvements, deterring them from using more expensive
advanced technology.

Finally, we already see many providers participating in VBC
arrangements standardizing their care pathways to achieve
cost-effectiveness goals emphasized by these new payment models.
Standardization may leave little room for provider adoption and
patient access to breakthrough technologies that challenge existing
standards of care. How can we make exceptions so that patients can
access breakthrough innovation and payers and providers can test
cost-effectiveness in the real world?

The conversation at Deloitte and NEHI's convening led us to
identify four changes that may help integrate medical innovation
into VBC models. Most importantly, the discussion pointed to the
need for ongoing cross-stakeholder dialogue, specifically, giving
life sciences companies a more prominent seat at the table.

Evidence from the field suggests that a few "early
adopters" are already heeding the message that
cross-stakeholder discussions are needed to bring medical
innovation to patients under VBC. Just last month, Cigna and
Novartis agreed to performance-based pricing for Entresto, a new
drug for the treatment of heart failure. Under the deal, Cigna will
pay Novartis based on how well the drug improves the health of
heart failure patients in Cigna's commercial business. Novartis
will be measured on how well the drug reduces the number of
patients with heart failure hospitalizations.
1

In another recent collaboration, Eli Lilly and Anthem joined
together to suggest policy solutions that may remove regulatory
barriers that are impeding additional similar value-based payment
arrangements today. The two companies said in a recent Health
Affairs blog that anti-kickback statutes and government price
calculations may need to be reconsidered before additional
value-based collaborations can move forward.
2 The Centers for Medicare and Medicaid Services
(CMS) is also joining the conversation, most recently announcing it
will test new ways to pay for drugs covered under Medicare Part B
payments to physicians and hospitals.
3

In the not-to-distant future, medical innovation will likely be
measured against an evolving definition of value, based on clinical
and economic factors, as well as the ability of products to
optimize care delivery. Life sciences companies should consider
engaging health plans, providers, consumers, and policymakers
now to shape how the value delivered by their products
will be assessed in that future state. This will likely call for
ongoing conversation among all health care stakeholders to ensure
that this definition of value gives patients access to today's
and tomorrow's life-changing innovations.

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guide to the subject matter. Specialist advice should be sought
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